In corporate governance, authorization and signatures may seem like routine administrative procedures. But are you certain that the authorization has been granted to the right person, within the right scope, and at the right time? A “habitual” signature made without proper authority can render contracts invalid, trigger disputes, or even cause enterprises to lose benefits worth billions. So what are the common risks in managing authorization and signatures in enterprises, and how can they be prevented from the outset?
In practice, when providing legal consulting services to enterprises, DEDICA has found that many risks do not arise from complex transactions, but from poorly controlled authorization and signature management. As businesses grow rapidly and the number of contracts, documents, and transactions increases, issues such as who is authorized to sign, within what scope, and on behalf of whom are often neglected or handled subjectively.
In essence, authorization is a mechanism that enables enterprises to operate flexibly without relying entirely on the legal representative. However, authorization in enterprises is only truly safe when it is established in compliance with the law and strictly managed.
The signature of an authorized person is the “legal gateway” that gives rise to rights and obligations for the enterprise. Once a signature is deemed invalid, the entire transaction may be declared void, leading to serious legal and financial consequences.
Many enterprises believe that “we are all colleagues, signing for each other is faster,” or “this has been done for years, it should be fine.” This very complacency allows risks in managing authorization and signatures to accumulate silently, only to erupt during disputes, inspections, or audits.
When the authorization system is unclear, enterprises may face far more serious legal risks than expected.
Signing beyond authority or outside the authorized scope
This is the most common risk in authorization management. In many cases, authorized persons sign contracts beyond their granted authority, or an authorization intended for one type of transaction is used for multiple purposes.
As a result, counterparties may request that the contract be declared invalid, or the enterprise may incur significant time and costs to prove that the transaction was “ratified afterward.” In disputes, enterprises often find themselves in a passive position.
Inadequate or outdated authorization documents
Another risk is the use of poorly drafted authorization documents lacking key information such as duration, scope, transaction value, or failure to update them following personnel changes.
It is not uncommon for former employees to remain named in old authorization letters. When a transaction arises, the enterprise must confront the question: is that signature still valid?
Abuse of internal signatures and seals
In many small and medium-sized enterprises, signatures and company seals are managed rather loosely. Administrative staff or middle managers may easily access and use signatures or seals without proper control procedures.
This poses significant risks, especially in the event of internal conflicts. A single document signed at the wrong time or for the wrong purpose may entangle the enterprise in prolonged disputes.
Lack of authorization control in the digital environment
As enterprises shift to electronic signing and online approvals, signature management risks escalate to a new level. Without clear regulations on digital signatures, approval accounts, and access rights, it becomes extremely difficult to determine responsibility when incidents occur.
Identifying risks is only the first step. More importantly, enterprises need a structured authorization and signature management strategy that aligns with their scale and business model.
Establishing clear and unified authorization and signing regulations
Enterprises should issue internal authorization regulations specifying:
Who has the authority to grant and receive authorization
The scope, value, and types of transactions that may be signed
The duration of authorization and termination mechanisms
These regulations should be reviewed and updated regularly, especially when there are changes in organizational structure or legal representatives.
Standardizing authorization templates and centralized record management
A key solution to mitigating common risks is the use of standardized authorization templates reviewed by corporate lawyers.
Authorization records should be centrally stored, easily retrievable, and subject to clear access controls to prevent misuse or unauthorized application.
Strict control over signatures and company seals
Enterprises should establish transparent procedures for managing signatures and seals, including:
Clearly identifying authorized users
Recording signing histories
Separating responsibilities among document preparers, reviewers, and signatories
For digital signatures, multiple layers of security and appropriate authorization levels should be implemented.
Partnering with corporate lawyers to prevent risks
In reality, it is difficult for enterprises to anticipate every legal scenario on their own. Having corporate lawyers as long-term partners helps review authorization systems, provide early risk warnings, and propose appropriate solutions before disputes arise.
DEDICA Law currently supports many enterprises in building and operating outsourced legal departments, helping them effectively control authorization, signatures, and overall internal legal processes.
Are you facing similar issues in managing authorization and signatures in your enterprise?
Don’t wait until disputes arise to take action.
Contact DEDICA Law for tailored legal strategies that best suit your business.
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